Australians should prepare for more basic and important online services to go offline unexpectedly, the nation’s signals intelligence agency has warned, urging that “system security must be prioritised over system availability”.

The Australian Signals Directorate (ASD) also says businesses and critical infrastructure must use cutting-edge AI models to defend against digital threats, raising alarm that artificial intelligence is enabling more dangerous threats than ever.

In its annual cyber threat report, ASD warns hostile foreign governments, criminals and hackers are using AI to gather intelligence, disrupt critical infrastructure and steal money, and that Australians should fight fire with fire.

“We need AI tools to help automate our defences to stay ahead of AI-enabled attackers,” the ASD director general, Abigail Bradshaw, said on Monday.

“Australia must accelerate the modernisation of its technology and cybersecurity foundations to protect the systems we rely on every day.”

The annual threat report, released on Tuesday, revealed that ASD had responded to 1,500 cybersecurity incidents in the 2025-26 year, an increase of 20% from the previous year. It also notified external entities – including businesses, governments and critical infrastructure – of more than 4,400 potential malicious cyber incidents, up 80% in a year. AI is expected to accelerate those dangers in future.

ASD said government and private networks in Australia experienced “persistent” breach attempts from state-based actors last year, and claimed such actors “in the Indo-Pacific” could be launching attacks to prepare for potential future conflicts – including “future intelligence collection or disruption activities”.

The agency said the increasing availability of AI was creating positive opportunities, but also allowing cybercriminals and state-based actors to find vulnerabilities and launch attacks faster and more effectively. ASD warned “all network owners are facing elevated threat levels”, saying cybersecurity was now a “core business risk and leadership responsibility” for all organisations, no longer only a technical concern.

The report said integrating AI tools into cybersecurity functions could help find potential weaknesses or suspicious behaviour, and improve responses.

“To strengthen our cyber defences, we must harness the technologies that are reshaping the threat environment,” Bradshaw said.

She has spoken previously about ASD having access to Anthropic’s Mythos model, the powerful AI tool which the frontier lab said it couldn’t release publicly because it could identify unknown flaws in IT systems. While the use of AI by malicious actors is on the rise, Australian government agencies believe having access to such frontier models and collaborating with leading AI labs is critical to bolstering cybersecurity.

“To stay ahead, Australians must enhance their cyber defences while harnessing AI’s benefit,” the defence minister, Richard Marles, said on the report’s release.

Tony Burke, the minister for home affairs and cybersecurity, said the government was “positioning Australia to respond to the evolving threats and opportunities presented by emerging technologies”.

Bradshaw said “legacy technology”, such as outdated systems or devices that were no longer supported with new updates by their creators, were among the biggest risks and most attractive targets for hackers. ASD called for Australia to modernise technology and cybersecurity capabilities, and said all organisations must take stronger action to ward off new threats.

Last week, newly discovered vulnerabilities in PHP – a programming language that underpins most websites – triggered a rush by governments and businesses to fix the problem.

ASD urged organisations to update their systems, seek help from ASD and report suspicious incidents.

Bradshaw and Marles said organisations should prioritise the security of their systems over keeping them online, which could mean more services are forced to go offline while they are secured.

“In a threat environment transformed by AI, collective action is our strongest defence,” Bradshaw said.